Chicago, Park Row Development sued over alleged mishandling of Invest South/West redevelopment process

On the heels of a mayoral election that ousted Chicago Mayor Lori Lightfoot, her signature program, Invest South/West, faces a lawsuit from a developer who alleges wrongdoing in the selection process for redevelopment of the long-vacant Pioneer Bank building and surrounding parcels in Humboldt Park.

The Hispanic Housing Development Corp.’s lawsuit alleges that “the City acted arbitrarily, capriciously, and unfairly in accepting a facially lowball and facially irresponsible bid from Park Row Development LLC, a for-profit entity with no experience in real estate development.” The suit also alleges that the project will “cost the taxpayers tens of millions of dollars more than Park Row represented in its bid.”

The Hispanic Housing Development Corp. filed the lawsuit — the first to challenge an Invest South/West project — against the city and the Park Row Development team on March 24 in Cook County Circuit Court and requests that the city instead select its firm to redevelop the site. The development corporation was the only other developer who answered the city’s request for proposals in 2021.

The lawsuit represents the latest criticism against Lightfoot’s Invest South/West program, an initiative by her administration to revitalize historically neglected neighborhoods on the South and West sides. The program, which the Lightfoot administration has touted as never having been done before, has faced backlash from community members, aldermen and developers.

“It is not a matter for us of bitter fruit; it is a matter for us of something fair and just,” said Hipolito “Paul” Roldán, president and CEO of the Hispanic Housing Development Corp. “You can’t have a city the size of Chicago cheating. … The whole thrust of Invest South/West is community-oriented, community wealth building, community enhancement of development capabilities the community has … (This) is an indictment of the whole Invest South/West program.”

The city’s Department of Law told the Tribune in an emailed statement Wednesday that the city does not comment on pending litigation.

Matt Mosher, partner and co-founder of Park Row Development, told the Tribune Monday that “We are saddened and disappointed to have this claim filed against us to stop our project” and declined to comment further until the legal process is complete.

The first court hearing was originally scheduled for July 25, but the Hispanic Housing Development Corp. received a revised hearing date of April 10 after requesting an emergency hearing, according to Paul Balik, the attorney representing the development corporation.

Balik said this request for an earlier hearing was made because his client wants to stop the city from further greenlighting the redevelopment, and a vote to approve Park Row Development’s $13 million request in tax increment financing dollars for phase one of its project is expected to come in the City Council’s next meeting scheduled for April 19. Tax increment financing dollars are funds that developers can access to make infrastructure and other community improvements by tapping into money pooled together by neighborhood property taxes.

Built in 1924, the Pioneer Bank at 4000 W. North Ave., features Classical Revival-style architecture that helped it earn its 2012 historic landmark designation.

Included in the city’s request for proposal in April 2021 was not only the task of redeveloping the Pioneer Bank, but also an adjacent two-story building and eight separate vacant lots, all of which fall between 4000 to 4008 W. North Ave. and 1616 to 1638 N. Pulaski Road.

When Park Row Development was selected by the city in November 2021 to spearhead the project in Humboldt Park, the developer expected the total costs to be $53.9 million, with the redevelopment of the Pioneer Bank and its next door building to cost around $21 million.

In the first phase of development, the 50,000-square-foot Pioneer Bank building will be renovated into commercial office space that will likely include two nonprofits — BTEC, which specializes in workforce management and career training, and Arquitectos, a professional resource organization for Latino architects — and the headquarters of JGMA, an architecture firm and co-developer of the project, according to a March 15 announcement of the TIF proposal to the City Council.

Next door, at 4008 W. North Ave, the Pioneer Bank Annex building is slated to become a restaurant and cafe, as stated in the March 15 announcement.

The city announcement said that the second phase of the project, located at a parking lot north of the bank along North Pulaski Road, will be the site of new affordable housing. The Tribune previously reported in 2021 that the plans include 75 units of affordable housing, offices for Humboldt Park Family Health and a potential library branch serving the West Side neighborhood.

The developer declined to answer questions from the Tribune regarding its exact plans for the redevelopment project until after the lawsuit is resolved.

One of the Department of Planning and Development’s stated goals in the April 2021 document for the Humboldt Park development was that it was “seeking a developer with experience in Chicago’s Humboldt Park community and/or similar communities.”

Park Row Development was founded in October 2020 and declined to answer the Tribune’s questions regarding its development history during the ongoing litigation. Hispanic Housing Development Corp. was founded in 1975 and has more than 15 years of experience building hundreds of affordable housing units in Humboldt Park.

Some Humboldt Park residents told the Tribune that their support was behind the Hispanic Housing Development Corp.’s proposal because it met more of the community’s desires articulated in the request for proposal.

While consulting with the Department of Planning and Development, community leaders and Ald. Roberto Maldonado of the 26th Ward created a list of potential uses for the various parcels to be developed under the moniker of the “Latino Cultural and Community Hub,” according to the April 2021 request for proposals document from the Department of Planning and Development.

The document states that the Pioneer Bank redevelopment must feature some of all of the following: a community theater or function space for cultural and special events; a center for local arts and culture; a branch location for the Chicago Public Library; a business incubator for entrepreneurs; and an empowerment center for youth and families with computer labs, study areas and meeting spaces.

Milka Ramírez, who was born in Puerto Rico and came to Humboldt Park with her family when she was 1, is the co-founder of En Las Tablas Performing Arts, an organization that was included in the Hispanic Housing Development Corp.’s project plans.

Located in the nearby Hermosa neighborhood, Ramírez’s organization would have expanded its arts classes to Humboldt Park and brought other smaller arts organizations to its new space.

While Ramírez’s organization is now expanding at the site of its current location, she said she hopes the lawsuit will bring transparency to the Invest South/West selection process “so that proposals are (evaluated) in a way that is … embedded in integrity and that honors the voice of our communities,” something that she says did not happen with the Pioneer Bank request for proposals.

“It was my understanding that the community overwhelmingly supported the RFP with Hispanic Housing,” Ramírez said. “I can’t help but think that there were other political powers in place that intervened in the community being able to exercise their voice.”

William “Bill” Smiljanic-Perez was one of the three community members on the request for proposals selection committee, which he said also included six city officials. He said he thinks what the selection process ultimately came down to was the costs of the proposed development projects, with Park Row Development asking for the lower amount of public subsidy.

The Hispanic Housing Development Corp.’s estimated costs came out to $66.7 million, nearly $13 million more than Park Row Development’s estimates.

Smiljanic-Perez called the process “political” and said that it “sickened” him to see the city tout Invest South/West as an initiative that listens to community members.

“When you are behind the scenes, and you see what is done, it is status quo. … They have to do what the alderman wants … and do what is a win for the mayor’s office,” Smiljanic-Perez said, who is a board member of Humboldt Park community group Noble Neighbors. “This is not a win for the community.”

Newly elected 26th Ward Ald. Jessie Fuentes — who was also one of three community members on the request for proposal committee — declined to comment on the lawsuit. Outgoing Ald. Roberto Maldonado did not return Tribune requests for comment.

Roldan, founder of the Hispanic Housing Development Corp., said the issue is a broader one than the lawsuit. He says it is about fairness, equity and justice.

“There’s a phrase in Chicago: ‘We will only give the job to somebody that somebody sent,’ ” Roldan said. “Somebody with political influence sent these people so that’s what qualifies them as opposed to do they meet the requirements of the RFP and the standards of being a legitimate developer.”

Chicago Tribune’s Robert Channick and Gregory Pratt contributed.